Ask MetaFilter questions tagged with money and taxes

Need help figuring how much to put aside...

InterestedInKnowing — Mon, 23 Nov 2009 20:57:14 -0800

I need to know a rough estimate of how much I should take out in taxes. Theres no withholding with my checks because the temp agency is whack like that. But I need to know how much to take out for tax season? I live in NY, but don't live in the city. So far I earned with this agency... 7466.55. The end of the year it will be $9000 earned. Can anyone help?

How to invest $30k for 3 months?

trbrts — Wed, 04 Nov 2009 07:09:12 -0800

What are some good low risk ways to invest $30k for about a 3 month period? So, our house is under contract, but, so far we've been unable to find a house that's meeting our requirements. At this point I feel that we aren't going to see anything good until after the holidays. So, we're probably going to switch over to looking for a rental. Rather than just sticking the money in the savings account, I'm open to taking some of it and seeing if we can get some kind of return, but, I don't know anything about investing. So, what are some ways I can invest around $30k for around a 3 month time frame that will see some kind of return. Obviously I can't get too crazy with this money and I understand that 3 months is a pretty short timeframe. Would there be any tax implications in doing this? Thanks in advance.

What address to put on returns for filing taxes for two states?

Rustbeard — Tue, 07 Apr 2009 18:01:03 -0800

Last year I lived and worked in two different states (RI and CA) I worked two jobs in RI and then got another temp job in CA and moved out there in the fall. So I am using TaxCut to file my returns (yes I know its cutting it close) but I am confused when it asks for the "Employee's address" under the W-2 section; what do I put? Do I put my address where I used to live for those jobs back in RI or my current one in CA? I still consider myself a RI resident and will be moving out of CA in two weeks back to New England.

Self-employment tax help for out-of-state web work

Anonymous — Tue, 24 Feb 2009 16:16:41 -0800

Self-employment tax help for out-of-state web work In late 2007, I moved from Ohio to San Francisco, leaving my full-time web-related job. In early 2008, the company I left started tossing freelance work my way. Lots of freelance work. So much that I never even needed to find local clients.

Questions:
1) Will I have to file an Ohio income tax form because the company paying me is located there? What about the city where the company is? (Yes, when I lived in Ohio we had city-level tax forms to file. I mentioned this to a SF resident once and it surprised them)

2) I'm assuming that I have to file a California income tax form since I live here, but are there any laws that say, for example, if the higher income tax state only gets the difference between the two rates? Or anything else pertinent?

Notes:
a. I have not been keeping up with estimated quarterly payments. Yeah, I know that's not really smart. I'd never intended to be a full-time freelancer. If I wasn't in the sweet situation of getting a steady stream of work from a company I was at for a decade, I don't think I'd have the temperament for it.

b. If it matters, we're talking about $73K of 1099 income.

What kind of records do most sole proprietors, freelancers and consultants keep?

Anonymous — Tue, 17 Feb 2009 19:39:33 -0800

What sort of state of organization are the financial records of most sole proprietorships in? I've had a small freelance business for about 15 years. About 3 years ago, I was in a car accident that was 100% not my fault. (The other driver admitted fault and there were witnesses.) I am now in the middle of legal dealings with my insurance company, because of the state of whiplash, the effect on my pregnancy and the effect on my ability to run my business and maximize earnings. (I do have a lawyer.) The insurance company is asking for all my financial records from the past nine years. They want copies of every receipt, invoice, mortgage interest statement, etc.

I've never kept a general ledger or anything like that. I just invoice and pay my expenses and credit cards and stuff like that. I've never been very formal about things, although I am excrutiatingly honest. I don't lie on my taxes. However, there have been situations where I just phoned the mortgage company to get the interest amount for my mortgage for the year (for business use of home), because I figured that if I got audited by the government, I would just phone and get a statement sent out. And, as I mentioned, I don't have cash flow statements or anything like that. And sometimes my receipts are in my name, my husband's name or both our names. But I always put money into our joint account to cover everything, usually lump sums throughout the year.

I had planned to incorporate and set up with an accountant, but, because of the car accident, I am just beginning that process now. Going forward, my records will be more diligent, since I'll be incorporated.

But, I'm wondering...what is the typical state of financial records for most freelance and consulting type businesses? My lawyer seems baffled that I have unaudited records...he's not used to sole proprietors. He seemed surprised that I had been doing my own taxes (for all but 3 of the total years, because, honestly, the accountants never got me any more tax back than I got on my own). For the most part, my business records are my personal income tax records, since the sole proprietorship income tax is part of that. I never saw any point to doing balance sheets and neither did the bookkeepers or accountants. Are other freelancers and consultants in a different situation? (Again, I'll be changing this going forward.)

Help me get a great accountant in the UK (pref Manchester), who understands on-line businesses.

Andorinha — Mon, 29 Dec 2008 06:39:52 -0800

Help me get a great accountant in the UK (pref Manchester), who understands on-line businesses. So! I started a business without really knowing I was starting one. Now it's time to pay my taxes and I have no idea what I'm doing. I'd like to pay someone to do this for me - everything was conducted through Paypal (expenses and sales), and so I have the Excel file with all the transactions for the year. I need someone to take this, sort everything out, and advise on what else I can take off my payment (rent, utilities, etc - I work from home) I am registered as self-employed but that's as far as I've gone.

Anyone has some fantastic personal recommendations? I have a few contacts but most don't even have an e-mail address, which worries me since 100% of my business is conducted on-line. E-mail is vandapn@gmail.com.

Any help would be incredibly appreciated!

I swear, I am not this stupid.

Medieval Maven — Sat, 15 Nov 2008 09:12:17 -0800

I'm in over my head, and I just need a system that will help me do some very, very simple accounting. We have a 501c3. It's doing >$5,000/year in donations/income, and I need to file our taxes. I have attempted Quicken for my personal finances and just hated it. I tried Gnucash, and I feel like it's written in another language. I am at a loss and just need to figure.this.shit.out. A little more info about what we do:

Shows are free. People make donations as they come in or leave.

For a flat donation, patrons can have reserved seating and they can order catering at an additional cost. We make *nothing* on the catering.

Snacks and drinks are available for $1 donation per item at every show.

We do a fundraiser event where tickets are $5.00 and concessions are $1 each, all considered for our ease of use, donations.

Since it's all "donations" to us, we do not track specifically what is in the basket versus what we make on concessions; we do know what we make on tables vs what we pay out for catering because it's an online reservation/donation system.

We have a bank account, and I download our statements religiously.

I can consult an accountant friend, but I need to have the information organized in a coherent manner when I do, and currently, it ain't. This person is not going to DO our taxes for us, nor are we able to afford an accountant as all of the 501's money goes to its mission. Please do not lecture me on this count, as it's not helpful to my problem. I know we could use an accountant, but I could also use a vacation in Aruba.

US income tax history and theory for dummies?

p3t3 — Fri, 17 Oct 2008 18:14:41 -0800

With all the bickering over taxes in the election campaign, I'm trying to get a broader picture of US income tax history, theories behind past policies, and analysis of how they worked (in idiot friendly language). I found this income tax rate history chart, and was surprised to see that 50 years ago, the wealthiest brackets were paying 70-90% taxes on income.

Then I found this tax history fact sheet, which is sort of what I'm looking for, but either with a little better explanation, or in simpler language. For instance, I'd like more explanation on passages like this:
Over the 22 year period from 1964 to 1986 the top individual tax rate was reduced from 91 to 28 percent. However, because upper-income taxpayers increasingly chose to receive their income in taxable form, and because of the broadening of the tax base, the progressivity of the tax system actually rose during this period.

All links, explanations, articles, anecdotes appreciated!

Cheaters never win.

Anonymous — Fri, 05 Sep 2008 11:41:07 -0800

I cheated on my taxes twice. I got caught once. Will I get caught again? About 10 years ago, when I was younger, stupider, and more destitute, I cheated on my taxes. I got a refund instead of having to pay, and I went on with my life. A couple years later, I did the same thing again, and again I got a refund.

The other day, I got a letter in the mail from the IRS. They caught me. I have no defense, and I am planning to pay and make good on my stupid decision, and I no longer cheat on my taxes.

My question is, now that they've found me once, have I been "red flagged" - will they be more inclined to look for anomalies in my other tax filings now that they know I've done it once? Are they inevitably going to find the other one?

I understand that what I did was wrong, I did it anyway, and now that I've been caught I have no hesitation in making good on my prior bad decision. Please do not judge me for doing what I did - I've done plenty of that myself. I just want to know if I'm going to have another letter come to my door here soon.

Is It Smart To Have My Foreign Employer Pay Me In Their Country?

chartreuse — Thu, 04 Sep 2008 08:22:41 -0800

Being a 21st Century kind of guy I find myself now doing long-term work for a few companies overseas (India and the U.K.). I would like to be able to open a bank account in each country and just get the money I need via ATM. I'm thinking that since the dollar sucks it would probably be better financially for me long term. Is this a smart move? How hard is it for citizen of the US open a bank account in a foreign country? Do I have to report that income? And if so will I end up getting taxed twice?

I could've used the money for beer back in those days.

Any Moose In a Storm — Wed, 16 Jul 2008 10:59:18 -0800

Found an old W-2 from the chaotic grad school years (2000) that I never filed taxes on. Is it still possible? Looks like I'm owed money. I used to work temp jobs from time to time, and apparently never filed for that year. I didn't work enough to have to pay taxes. Is there anything I can do to get my withheld back?

What is the best financial/tax situation for a family with a kid on the way?

Anonymous — Wed, 02 Jul 2008 06:27:17 -0800

What is the best financial/tax situation for us? Kid on way, financial aid eligibility concerns. Me: grad student for 2 more years, on a teaching assistantship (this covers tuition, fees, health insurance, and gives me a $1600/mo. stipend) and with some student loans on top (less than $10k/year). I also work in the summers, but make less than $5k. I also receive research grants sometimes ($5k-$15k). In 2008, I will only have been in the country for 2 months and will have an income of less than $5k. In 2009 and 2010 I will be be back on the normal track with $1600/mo. and some loans with perhaps 2-3 months of a travel grant of ~$6k.

Him: working person making a good salary (floating around 6 figures)

New factor: baby on the way at end of year (will be on Dad's insurance and Dad's company covers childcare)

The way that we see it, here are our financial options:

(1) Stay unmarried, he claims baby on his taxes.

(2) Stay unmarried, I claim the baby on my taxes. (But would this screw up my student loan/financial aid eligibility by making me look richer?)

(3) Marry and claim kid together. (Again, would this screw up my student loan/financial aid eligibility?)

How to report tax info I don't have?

daisyace — Thu, 10 Apr 2008 13:48:20 -0800

What date acquired and cost basis should I put for two items reported on a 1099-B, when there are several unknowns? I have this on a 1099-B:
10/26/07.......Avaya cash merger at $17.50 per.......quant:16.......box 2: $280.00
4/5/07..........LSI corp cash in lieu............................................box 2: $7.94

These companies came from Lucent, which my grandmother gave me years ago, before she died, and I don't know what to put for date acquired and for cost basis.

For date acquired:
- 1947 is when my grandmother's husband bought att, which both of the above eventually came from.
- 1958 is when my grandmother's husband died. I don't know whether he gave Grandma att before he died, or whether she inherited it.
- Roughly late 90's is when Grandma gave me Lucent, which had come from att.
- 12/1/06 is the date that Avaya spun off Lucent.
- 10/26/07 and 4/5/07 are the dates of the reported events on the 1099-B.

For cost basis, I know that the basis of a gift is the giver's basis. But I
don't know:
- what Grandma or her husband's basis was, and which of those is relevant.
- what percent of the investment that had that basis they gave to me.
- what percent of what they gave me became the two companies in question.

If it matters, my mom thinks that when I was given Lucent, it was worth
about $25 per share, and $9500 all together. Now, all the parts taken together are worth much, much less.

I know that, to be safest, I could treat the entire $287.94 as capital gains even though they may actually be losses. This would cost me $75 in Federal tax, I'm not sure how much in state tax, plus the value of whatever loss I could have written off against other gains. I could try to find a tax advisor to help, but I suspect that would cost more than I'd save (plus, at this time of year, it would be a challenge to find one). I've tried the IRS help line and the investment firm where these are now held, but I reached dead ends because of the information I'm missing.

Deductions for Bi-Coastal Business

vVCHAZVv — Thu, 27 Mar 2008 11:07:46 -0800

I’m a writer who is spending more and more time in Los Angeles for work. I live in Florida, and am a Florida resident. My question is this: If I rent a place in LA, because I am spending roughly half of my time there, what deductions can I take advantage of? Further info: I’ve established a Florida Corporation for my work. My primary residence is in Florida. Most of my work revolves around the entertainment industry these days, thus requiring me to spend roughly half the year in LA. Hotels are just getting too expensive, as is renting a car.

If I lease a place in LA, and purchase another car for LA, what deductions are available to me/my company? Would I be able to deduct all of the rent? What portion? How about utilities? Car insurance? Essentially, the only reason I am in LA is to work, and all of these things are necessary to for me to work here. Personally, I’ll spending as much time as possible in Florida (my home), and will keep my residency there. However, the business needs to provide a place for me to live and work when on the west coast.

Believe it or not, I’ve asked this same question of some accountants, and I’ve gotten different answers from each of them.

I’d love to hear what any accountants, lawyers, business owners, etc have to say about this.

Thanks!

Accountips

pinto — Thu, 06 Sep 2007 13:54:54 -0800

Can anyone recommend a good, affordable accountant in the New York City area? I am establishing a freelance business and will need to estimate taxes, think about eventual incorporation, etc.

canned cat food or sushi?

the dief — Fri, 18 May 2007 07:25:11 -0800

So I will be making x dollars gross in Ontario, that translates to... Yet another delightful question in the I'm-moving-to-Ontario-from-the-US series. If I've got a salary of X dollars gross, is there any sort of online widget or happy little calculator that can tell me approximately what my take-home pay will be after taxes? Obviously I'm not looking for spot-on laser accuracy, but just a general gist so I can plan for housing, whether or not I buy a new bike, etc.

I've found lots of Canada-related money calculators online, but they all deal with after-tax income for things like home buying or investing or what-have-you.

HSA's = tax-free retirement account?

MrBCID — Wed, 16 May 2007 17:21:06 -0800

Health Savings Accounts (HSA's) ... Can they be used as just another tax-free retirement account after you max out your Roth IRA? I usually max out my Roth IRA and contribute to a 401(k) ... I just came across this Newsweek article that got me thinking about opening an HSA.
I used to contribute to a Flexible Spending Account and understand that the money in an FSA is lost if not used within a year...
An HSA on the other hand would let me keep that money in there kind of like a Roth IRA correct?
Do I have to be enrolled in a High Deductible Health Insurance policy to be eligible?

I am 22 years old and don't need my medical insurance for anything more than a yearly check-up.

Any advice would be really helpful. Thanks in advance.

Tax planning advice for the self employed.

Nothing — Mon, 26 Mar 2007 13:57:55 -0800

Tax planning advice for the self employed. The web is full of articles, the bookstores are full of guides. But there is so much "get rich quick" and "pay zero taxes" crap out there that I am not sure where to go for good, solid tax planning advice. Is it better to operate as an LLC? An s-corp? What expenses are deductible? What is a good system of recordkeeping? What records should be kept? If I have two related business pursuits, should I keep track of them separately or together? And so on. I know I need to see an accountant, but I'd like to be as educated as possible. Right now I am paying a rather high percentage of a rather small income in taxes. I'm not anti-tax, but I am very pro-eating.

So, what books do you recommend? What websites have accurate, useful articles? What has helped you better understand managing finances as a self employed person?

How to protect my nest egg without losing my shirt?

svenx — Fri, 23 Mar 2007 12:38:46 -0800

Tax question: Is it better to diversify (and pay a lot of taxes) all at once, or to spread it out over a few years? When I was born, my grandparents gave me some AT&T stock. Fast-forward 35 years, and the stock has split, spun-off, re-consolidated, etc., and grown a whole lot. In fact, it now accounts for about half of my total net worth. I know that's not a good thing, and I need to put my eggs into many more baskets. Unfortunately, that will mean selling a big chunk of the AT&T, and paying a lot of taxes on it. My question is whether it would be better to do that all at once, and get the pain over with, or if there would be some benefit to doing it a little at a time over a few years. I'm sure that depends on many different details of my specific situation, but I was wondering whether there was any common wisdom or advice about this sort of thing. Thanks for any help!

Personal finance SOS!

Anonymous — Wed, 21 Mar 2007 09:11:46 -0800

My wife and I have a relatively high combined income for the first time ever (much to our surprise), but we are pretty financially unsophisticated and getting hit hard by taxes. I am beginning to think the big tax bill for 2006 is a lost cause, but can anyone in MeFi-land offer any advice about how to take better control for 2007? It is kind of ridiculous to be soliciting anonymous advice over the Internet in this scenario, but I'm not sure where to get started in the real world. (FWIW, I know you are not my lawyer, CPA, financial adviser, priest or sweet Aunt Sally.)

Together my wife and I made about $230,000 last year, due to some career changes. In years past, our combined income was about $50,000. Due to underwithholding by our employers, we owe an additional $10,000 in taxes above the $40,000 or so paid through withholding. The silver lining of our financial unsophistication is that all the money we didn't spend from our salaries, we just left in a checking account--so we have cash to pay the taxes. The bad news is that, unless we wise up, I expect to be in the same position next year: we don't intend to be buying a residence or having additional dependents. The IRS online withholding calculator is forecasting that unless we change our withholding, etc., we will underpay by $18,000(!) next year.

Neither of us has a retirement account. Based on my research, I think our combined income puts us over the limits for traditional IRAs, and I think a 401(k) is funded only in the calendar year in question (so, no last minute deposits like you can do with an IRA, right?). We don't have a lot of expenses, so we don't itemize deductions. Vast sums of student loans, but no credit card debt.

So, a two-fold question: 1) is there anything we can do to try to reduce the taxes we have to pay for 2006, given the IRA income phaseout? and 2) who do people with money get to help them with money questions? I'm looking for advice both on taxes and on saving towards particular goals (house, kids, caring for parents, retirement, the whole list of things that keep you up at night). Do I need an accountant? A financial adviser? Both? Could they be the same person? Would such a person just try to sell me some hot new stock I don't want?

We live in NYC, if you have any personal recommendations. Email is askmefi2007 @ earthlink dot net.

This is all a new world to me, and I am a bit embarrassed both to be making so much, and to know so little. Thanks in advance for any input.

USA freelancing from abroad?

LongDrive — Tue, 13 Mar 2007 19:38:06 -0800

Are there any US citizens here who have lived abroad but did freelance or contract work for clients in the States who can share their experiences? I am a US citizen living in Australia as a Permanent Resident since 2001. I have just gotten some freelance work from the States and need to figure out who I need to talk to on which shores to figure out the details. My obvious main concern is how I can invoice and get paid. All my US bank accounts were closed for inactivity around 2002-3. Factors that may make a difference:

-I still have immediate family in the states.
-The businesses that I will be invoicing will be fairly large companies, so in the hopes of getting future work, the process would have to be as straightforward as possible. IE, no money wiring, paypal transfers, etc.

My secondary concern is how this affects my taxes. A previous post turned up a great link on the Australian Tax Office site with regards to foreign income, but alot of it is really greek to me. I am estimating the total income would be no more than 10-15k per annum, and I have no other source of income in the states (investments, etc) Should I be speaking to an American or Australian accountant?

Help me hive mind! Thankyou!

Depositing money made freelancing into a 401k

blim8183 — Sun, 26 Nov 2006 13:44:15 -0800

I have a full-time job at a company that offers a 401k program which I'm currently participating in. I also have some freelance jobs that I'm doing. Is it possible to take all the money I get from my freelance work and put it into my 401k and avoid being taxed on it until I eventually take it out at retirement. I won't be needing this money anytime soon, it's just excess income, so I figured if I could put it away for retirement and not worry about the taxes on it, that would be great. Is this a good idea? I could put it in a Roth IRA but I feel like that would be confusing since typically you put money in a Roth IRA that's already been taxed but the company that is paying me isn't taking out taxes.

How to ask the IRS to give me a break

derekb — Sun, 19 Nov 2006 21:02:38 -0800

How do I approach the IRS? They got me - dead to rights - I screwed up a few years back, when rolling over my 401K into a IRA (then into a downpayment for my house). I *thought* my credit union paid taxes on that money when I rolled it over. I made a mistake. Now, that I'm "caught up", and ready to pony up the delinquent taxes, what the best way to ask the IRS to waive the penalties? Say "Pretty, please?" Everyone says one *can* negotiate with the IRS. So how, would one go about doing so? What might one do to make a positive outcome more likely?

Leaving on a jet plane - close accounts?

meijusa — Sun, 15 Oct 2006 04:34:36 -0800

Permanently leaving the U.S. to go back to Europe - do I have to close my bank account and credit cards? With the dollar being so weak I'd like to transfer/exchange my money some time later. But would the IRS want me to keep paying taxes in the U.S. for income from interest (however small)? Is it even legal to keep an account while being neither a citizen nor a resident?

You win You lose

gearspring — Sun, 30 Apr 2006 09:36:06 -0800

Do contest winners lose money because of taxes? If I enter a contest and win $100,000 in non refundable travel will I end up having to pay the taxes (US) from my savings? Can I refuse the prize and save my money? I didn't win anything, but reading the contest rules started scaring me away from even playing. What do people with no savings do in that situation? This whole system just seems wrong.